Thursday

27th Apr 2017

EU summit to consider 'reform contracts' for all euro states

  • Van Rompuy (r) next week will produce a short roadmap for more eurozone integration (Photo: The Council of the European Union)

Draft ideas ahead of next week's EU leaders summit foresee reform contracts for all euro states, political agreement on a full banking union and, post-2014, a budget for the eurozone.

The still-to-be finalised conclusions, seen by EUobserver, envisage progress towards profound economic and monetary union - the lack of which is considered to have led to the eurozone's current crisis - in three phases.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

By March next year, EU leaders are supposed to agree the "operational framework" for a single European banking supervisor, the first of three planks necessary for full banking union.

The proposed second phase (2013-2014) is where the EU leaders are likely to start haggling over language. It suggests that legislative proposals for a bank resolution directive and an EU-wide deposit guarantee scheme are made.

If this passes there will "in essence be political agreement on a full banking union," said one contact.

However the contact noted that there is likely to be a north-south divide in the discussions particularly on the deposit scheme as "this is money that will actually be used. It will not be lying around. People will be saying - so where are the weakest banks?'"

Another controversial part of the second phase concerns the idea that all eurozone states - regardless of whether they are breaking euro budget deficit rules or not - should be obliged to "enter into individual arrangements of a contractual nature with EU institutions" on reforms they need to make and how they need to make them.

Making all 17 euro countries enter these programmes would remove the otherwise potentially "stigmatising" nature of the programme. The idea is strongly promoted by Germany, the biggest contributor to the EU budget and the eurozone bailout funds, as it seeks more binding rules in exchange for its show of "solidarity."

The thinking in EU council president Herman Van Rompuy's cabinet is that all euro countries need to undertake reforms, no matter how fiscally prudent they are.

If the idea flies, the European Commission will be tasked with making a proposal on "such contractual arrangements" during 2013.

The draft conclusions imply that a possible change to the EU treaty would only come after European parliament elections and a new commission is installed in 2014.

In this phase - stage three - member states would aim for a "progressive pooling of economic sovereignty ... as well as reinforced solidarity between member states."

This could include a "fiscal capacity" or eurozone budget with a "degree of automatic stabilisation at the European level" meaning a limited form of automatic aid transfers for countries that suddenly find themselves in trouble.

By then more and more core decisions would need to be taken at EU level including on national budgets and "enhanced coordination of economic policies" particularly in the areas of taxation and employment.

EU leaders are due to debate these pre-cooked conclusions at a two-day summit starting Thursday next week. The conclusions will be accompanied by a short paper presented by Van Rompuy on a "roadmap" to the economic and monetary union (EMU).

The EU commission recently published its contribution to the forthcoming Van Rompuy paper in which it outlined similar ideas.

Irish EU ambassador Rory Montgomery Friday (30 November) noted that when the commission paper was presented to EU ambassadors last week there was "a lot of discussion around the table" on both the contracts idea and the fiscal capacity.

"Once you mention money in this town, immediate questions arise," noted Montgomery.

These include how much money, how it will be provided, how it will be controlled and who will be entitled to receive it.

"And then there is the question of whether a budget of this kind would be significant enough to influence reforms in a positive direction," said the ambassador.

Germany gets its way on reform 'contracts'

Germany says fellow EU leaders have "accepted the principle" of binding reform contracts that will transfer further sovereignty from national level to Brussels.

Eurogroup makes 'progress' on Greek deal

Eurozone ministers endorsed an agreement in principle between the Greek government and its creditors over a new package of reforms. But talks on fiscal targets and debt could still block a final agreement.

New anti-trust complaint looms over Microsoft

At least three security software companies “met several times” with the European Commission to complain about Microsoft’s alleged abuse of its market position. A formal case could follow.

Commission stops German-British stock merger

The decision to block the merger of the London Stock Exchange and Deutsche Boerse was expected, as negotiations between the parties broke down a few weeks ago.

SMEs lack support in EU financial plan

The European Commission's plan for a capital markets union is said to be aimed at small and medium-sized enterprises, but many could end up being left out in the cold.

New anti-trust complaint looms over Microsoft

At least three security software companies “met several times” with the European Commission to complain about Microsoft’s alleged abuse of its market position. A formal case could follow.

Investigation

MEPs oppose EU agency to prevent Dieselgate II

The European Parliament said on Tuesday that there should be more EU oversight on how cars are approved, but stopped short of calling for an independent EU agency.

News in Brief

  1. EU parliament moves to lift Le Pen's immunity
  2. EU Commission launches probe into Hungary's university law
  3. Scots slowly losing appetite for independence - poll
  4. Council of Europe puts Turkey on watch list
  5. EU to put parental leave on political agenda
  6. Israel cancels German meeting over human rights groups
  7. Hungary's Orban will participate in EU parliament debate
  8. Malta floats cash-for-refugees plan

Stakeholders' Highlights

  1. UNICEFRace Against Time to Save Millions of Lives in Yemen
  2. Nordic Council of MinistersDeveloping Independent Russian-Language Media in the Baltic Countries
  3. Swedish EnterprisesReform of the European Electricity Market: Lessons from the Nordics, Brussels 2 May
  4. Malta EU 2017Green Light Given for New EU Regulation to Bolster External Border Checks
  5. Counter BalanceCall for EU Commission to Withdraw Support of Trans-Adriatic Pipeline
  6. ACCAEconomic Confidence at Highest Since 2015
  7. European Federation of Allergy and Airways60%-90% of Your Life Is Spent Indoors. How Does Poor Indoor Air Quality Affect You?
  8. European Gaming and Betting AssociationCJEU Confirms Obligation for a Transparent Licensing Process
  9. Nordic Council of MinistersNordic Region and the US: A Time of Warlike Rhetoric and Militarisation?
  10. European Free AllianceEFA MEPs Vote in Favor of European Parliament's Brexit Mandate
  11. Mission of China to the EUXinhua Insight: China to Open up Like Never Before
  12. World VisionViolence Becomes New Normal for Syrian Children

Latest News

  1. Brexit is about Europe's future as well
  2. Power struggle in Greenland: Three reasons why the EU should care
  3. Nordic and Baltic countries step up digitalisation efforts
  4. European states still top media freedom list
  5. Let’s not put European public health at risk
  6. Threatened Budapest university calls for EU support
  7. Orban set to face down EU threats
  8. Dont expect 'quick fix' in Syria, China tells EU